Canadian miner Breakwater Resources posted profits of C$5.4-million in the fourth quarter of 2009. This compared to a net loss of C$53.5-million a year earlier, when it wrote down the value of its mining assets. The full-year result was a profit of C$0.8 million against a loss of C$88.3 million in 2008.
Breakwater produces zinc, copper, lead and gold from mines in Canada, Chile and Honduras.
Lower zinc prices in late 2008 and early 2009 hit profits, however CEO David Petroff said that the company curtailed its spending and has since benefited from stronger metals prices..
“By mid-2009 any concern that Breakwater would not survive had been put to rest,” he told analysts and investors on Friday.
The company ended 2009 with C$41.1-million in the bank, working capital of C$70.7-million and a portion of future earnings protected by the purchase of zinc put options, giving shareholders the benefit of higher zinc prices.
Fourth quarter concentrate production fell 6% year-on-year to 61,757 tonnes after the company suspended production at its Langlois mine in Quebec in November 2008. However, the suspension also meant that operating costs fell by C$58.8 million or 77%, while there was also a saving of C$12 million in depreciation and depletion charges.
Gross sales revenue declined 50%, to C$50.4-million for the quarter, as a result of a 63% decrease in concentrate sold and a stronger Canadian dollar, partly offset by higher realised prices.
While zinc metal stocking and destocking at various levels in the supply chain, as well as fund activity, makes supply and demand fundamentals difficult to gauge in the short term, the company remains confident that the outlook for zinc is positive in the medium and long term, Petroff said.
There are several mine closures looming around the world, and recent production problems or uncertainty at large operations in Canada and Australia are also a reminder that “mine supply cannot be taken for granted,” he added.
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